Farm Credit Canada is advising Canadian farmers to be aware of the value of the Canadian dollar and to keep on top of interest rates.
Farm Credit Canada’s mid-year economic outlook for Canada’s hog and pork sectors, released last month, indicates higher slaughter hog inventories will pressure profitability but continued strong demand for pork remains a positive factor.
Craig Klemmer, a Principle Agricultural Economist with Farm Credit Canada, says, while the Canadian is expected to remain stable, interest rates can be expected to move higher.
Interest rates have been increasing and the continued growth and strong economy that we have in Canada, strong labor market, it’s expected that interest rates are going to continue to move higher over the next little while. Market expectations are for interest rates to be increasing at least one more time here in the current year and likely continue to move higher into next year as the Canadian economy continues to remain strong and growing. That’s going to mean higher interest costs for producers and that’s going to be something to be monitoring.
On the Canadian dollar, that’s also impacted by interest rates and that spread between interest rate increases but we are looking at the Canadian dollar to remain below that 80 cent mark, in the 77, 76 range for the next little while as we continue to see strong growth in the U.S. economy and, as a result, that lower Canadian dollar is going to remain supportive of exports into the international markets and continue to help support the Canadian pork export market into the next year, into 2019.
~ Craig Klemmer, Farm Credit Canada
Klemmer says it’s important to be paying attention to developments in trade and to see where there are the opportunities for exports. He says that strong international demand will continue to see strong demand for Canadian exports but it’s important to make sue we remain agile in terms of getting our products to the markets that are available and to continue to add value to those products.